Rehn made us target minimum wage - Gormley
Published 26/11/2010 | 05:00
THE Government last night blamed the European Commission for the decision to reduce the minimum wage.
The planned €1 cut to bring the minimum wage to €7.65 was defended by the Coalition, as Fine Gael and Labour are promising to reverse it.
The Government cannot say how many jobs it believes will be created or protected by cutting the rate and some economists believe it will do little to reduce business costs.
The Coalition had strenuously denied claims the terms of the four-year plan were dictated by the European Commission or the IMF.
But Green Party leader and Environment Minister John Gormley claimed the European Commission demanded the Government reduce the minimum wage.
Under pressure from Fine Gael's environment spokesman Phil Hogan over the proposal in the four-year plan, Mr Gormley said the minimum wage cut was the "first demand" to come from European Commissioner Olli Rehn.
Immediately after the comment, Labour's Ciaran Lynch said the minister was saying that the minimum wage cut was actually upon the insistence of Mr Rehn.
Mr Gormley then began to backtrack.
"It was one of the things he said to me," he said.
The latest figures from the Central Statistics Office show that 47,000 people are on the minimum wage.
The new rate will only apply to new workers, unless employers can negotiate with staff to have payment levels dropped.
Meanwhile, Finance Minister Brian Lenihan also said the Government was also reviewing the employment regulations.
"As you know, in the tourist sector specifically, there has been a lot of complaint about anomalies such as double Sunday payments, such as disparities in payment rates between different parts of Ireland.
"It is important that our minimum wage structures have a simplicity in them and that they incentivise work and encourage employers to employ more workers," he said.
However, some economists believe the cut to the minimum wage will do little to reduce business costs and improve competitiveness.
"The reduction in the minimum wage is for optics rather than having a real economic impact," said Jim Power, an economist at Friends First.